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- 1 - Pavel I. Pogodin, Ph.D., Esq. (SBN 206441) CONSENSUS LAW 5245 Ave Isla Verde Suite 302 Carolina, PR 00979 United States of America Telephone: (650) 469-3750 Facsimile: (650) 472-8961 Email: pp@consensuslaw.io Attorneys for Plaintiffs BMA LLC, Yaroslav Kolchin and Vitaly Dubinin
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION
BMA LLC, Yaroslav Kolchin and Vitaly Dubinin, Plaintiffs, v. HDR Global Trading Limited (A.K.A. BitMEX), ABS Global Trading Limited, Arthur Hayes, Ben Delo and Samuel Reed, Defendants. Case No. 3:20-cv-3345-WHO
PLAINTIFFS’ RESPONSE TO DEFENDANTS’ ADMINISTRATIVE MOTION PER CIVIL LOCAL RULE 7-11 Complaint Filed: May 16, 2020 Second Amended Complaint Filed: July 14, 2020 Discovery Cutoff: None Set Pretrial Conference Date: None Set Trial Date: None Set
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PLAINTIFFS’ RESPONSE
Procedural Background
Plaintiffs filed the original Complaint, Dkt. No. 1, on May 16, 2020, alleging that Defendants engaged in racketeering in violation of 18 U.S.C. §§ 1962(d) and (c) (“RICO”) and cryptocurrency market manipulation in violation of the Commodity Exchange Act (“CEA”), 7 U.S.C. §§ 1 et seq., as well as state causes of action. Two days later, on May 18, 2020 Plaintiff filed an Amended Complaint pursuant to Fed. R. Civ. P. 15(a)(1)(A), Dkt. No. 6, with minor corrections of typographical errors and no substantive changes. On July 14, 2020, parties stipulated to waiver of service of process, filing of a Second Amended Complaint (“SAC”) and set a briefing schedule. Court has granted this stipulation, Dkt. No. 31, and Plaintiffs filed the SAC on July 14, 2020, Dkt. No. 32. Subsequently, in August of 2020, Plaintiffs asked Defendants to stipulate on filing of a Third Amended Complaint, adding new parties, which Defendants refused during a meet and confer call. Defendants filed their Motion to Dismiss under Fed. R. Civ. P. 12(b)(6) on September 14, 2020, Dkt. No. 42. Plaintiffs’ opposition to said Motion was also filed. To conserve judicial resources, Plaintiffs filed a Motion for Leave to File Third Amended Complaint (“TAC”, Dkt. No. 45) on October 8, 2020, overcoming all of Defendants’ arguments raised in their Motion to Dismiss. Dkt. No. 46.
Dolgov v. HDR Global Trading Limited
, No. 4:20-cv-07140-YGR was filed as a separate case because Defendants’ counsel Mr. Hibbard was trying to use any excuse, including a simple addition of new parties to the present case, for insisting on delaying the resolution of the initial motions in the present action even further. On October 1, 2020, Defendants Hayes, Delo and Reed were indicted by the United States Department of Justice (“DOJ”) on felony charges of violating the Bank Secrecy Act by willfully evading U.S. anti-money laundering requirements. On the same day, the Commodity Futures Trading Commission (“CFTC”) announced the filing of a civil enforcement action in the U.S. District Court for the Southern District of New York charging Defendants HDR, ABS, Hayes, Delo and Reed with operating an unregistered trading platform and violating multiple CFTC
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- 3 - Regulations, including failing to implement required anti-money laundering procedures. In announcing the indictment, FBI Assistant Director William F. Sweeney Jr. said: “As we allege here today, the four defendants, through their company’s BitMEX crypto-currency trading platform, willfully violated the Bank Secrecy Act by evading U.S. anti-money laundering requirements. One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just ‘a coconut.’ Thanks to the diligent work of our agents, analysts, and partners with the CFTC, they will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time." Defendant Reed was apprehended by the FBI in Boston, Massachusetts. Defendants Hayes and Delo remain at large and are currently fugitives wanted by the U.S. Government.
Statement Of The Relevant Facts
Defendants Hayes, Delo and Reed are notorious fraudsters, who have been criminally charged with felony money laundering related offenses by the U.S. Department of Justice and two of whom are currently fugitives from the U.S. law enforcement. Attached hereto as Exhibits A and B are true and correct copies of the announcements of the CFTC and DOJ enforcement actions against Defendants. Defendant Hayes publicly admitted to bribery of foreign government officials and bank fraud and even expressed pride in his criminal actions. Exhibits C and D are true and correct copies of two sworn declarations by two of the defrauded victims of the Defendants, Frank Amato and Elfio Guido Capone, attesting, under oath, how Defendants defrauded them out of millions of dollars. Being keenly aware of the Commodity Futures Trading Commission (“CFTC”) and Department of Justice (“DOJ”) investigations and imminently forthcoming civil and criminal charges, and while preparing to go on a lam from the U.S. authorities, Defendants Hayes, Delo and Reed looted about $440,308,400 of proceeds of various nefarious activities that took place on the BitMEX platform, from accounts of Defendant HDR, Exhibits E, F, G. The looted funds were divided among Defendants and their associate substantially in accordance with the
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